Alabama Baptist State Board of Missions

800-264-1225, ext 241 lwright@alsbom.org

1. Degree of control employer has over details of the work

2. Which party invests in the facilities used for work?

3. Opportunity the worker has for profit or loss

4. Whether employer has right to discharge the worker

5. Whether the work is part of employer’s regular business

6. Permanency of the relationship

7. Relationship the parties think they are creating

8. See Financial Issues, page 7

Must pay at least minimum wage

Must pay for all hours worked

Must pay overtime for any hours over 40

“Comp Time” may not be given except within that 7 day period

If employee must eat lunch with the children or is required to stay, must be paid for that time

See page 23 of the Financial Issues Book

Breaks are not required

Meal periods are not required

Vacation and holidays are not required

Sick leave is not required

1. W-4 Federal withholding. -www.irs.gov

2. A-4 Alabama Withholding -www.revenue.alabama.gov

3. I-9 Immigration Form -www.uscis.gov/I-9

4. E-Verify. See the USCIS web site at www.uscis.gov/everify

5. NH 1 Alabama New Hire Form -www.dir.alabama.gov/nh

The withholding forms W-4 and A-4 should be completed each year.

Due to ID theft involving the tax return, employees should consider thinking of their withholding differently:◦ ID Theft involving tax returns is one of the fastest

growing scams. If someone files on your SS # and claims a refund it may take a year to resolve and if the IRS owes you money, may take a year to receive the refund. So it is wise to complete the W-4 with the goal of breaking even rather than a goal to receive a large refund.

E-Verify is an internet-based system of US Citizenship and Immigration Services (USCIS)

that allows businesses to determine the eligibility of their employees to work in the

United States.

1. Federal law does not require E-verify. It is required by the Alabama Immigration Law.

2. All employers in Alabama are required to use USCIS E-verify as of April 1, 2012.

3. See the USCIS web site at www.uscis.gov/everify

4. Alabama has made this process simpler for small employers http://immigration.alabama.gov/eVerify.aspx

5. E-verify does not replace the I-9. Both are required.

“Everything is taxable unless the Internal Revenue Code says that it isn’t.”◦ Frank Sommerville, CPA and attorney

See the chart in Financial Issues, page 18

Love offerings are taxable.

Gift cards are taxable if given to church to give to a minister.

1. For a church having employeesa. 941 each quarter and corresponding AL form A-1

b. W-2 (not a 1099)

c. End of the year forms W-3, A-3

2. Most churches having preschool, daycare or school, monthly Federal tax deposits will need to be made and monthly forms

Mary Smith serves as the part time ministry assistant for the church. Her salary is $12,000.

In addition, the church contributes $1000 to her church retirement plan

Also, through a Salary Reduction Agreement, she contributes $1000 to her church retirement plan

Annual Quarterly Monthly

Mary Smith salary $12,000 $3,000 $1,000

Mary Smith federal

withholding

$600 $150 $50

Mary Smith FICA withhold

7.65%

$918 229.50 76.50

Church FICA match 7.65% $918 $229.50 76.50

Mary Smigh AL withholding $0 $0 $0

1. Number of employees 1

2. Wages, tips & compensation Mary $2750

1$2750.00

Good news! The IRS does not reconcile Box 2 with anything.

3. Total Income Tax withheld Mary $150

1$2750.00

$150.00

5a. Taxable Social Security WagesMary $3000

1$2750.00

$ 150.00

$3000.00 $372.00

$0.00 $0.00

$3000.00 $87.00

$459.00

$609.00Notice that Mary’s Contribution to her Church Retirement Plan did not reduce her wages subject to Social Security and Medicare

16-17 Deposit Schedule

A L

√

16

17

Mary Smith

Salary - $12,000 – Box 1, 3, 5, 16

Less SRA contribution to Retirement plan (only reduced in box 1 and 16)

________________________________________

Church contribution retirement $1000 – NO

Retirement SRA $1000 – Box 3, 5, 12

Church retirement contributions from employer – not on W-2; if from employee, included in box 3, 5, 12

Mary Smith

334 Main Street

Anytown, AL

$11000.00

$12000.00

$12000.00

$600.00

$744.00

$174.00

$11000.00 $0.00

First Baptist Church

101 Main Street

Anytown, AL

E 1000.00

Make sure you include your state withholding account number in box 15.

Accountants cannot e-file tax returns without this information. This will mean minister’s tax returns will have to be paper filed and will be delayed in processing.

Use Box 7 –Nonemployee compensation

Don’t Use Box 3 –Other Income

Be sure to obtain a W-9 on any person you might pay.

This will provide for you whether the person is incorporated or not

Will provide for you Tax ID number or SS number

If you do not have a SS number, you still must provide a 1099. Your church will be penalized for providing a 1099 without a SS number

You are required to do backup withholding of 28% if you have no SS number.

Alabama A-6 – Monthly

Alabama A-1 - Quarterly

Alabama A-3 – Annual (similar to W-3)

W-3 – Annual – totals amounts on W-2s

Form 944 – Employer’s Annual Federal Tax Return (only if instructed to do so by the IRS)

1099s and 1096 Transmittal form if you have any contract workers and the Alabama form 96

For the Small Business Health Care Credit

Non-profits will use a version of the 990-T and IRS form 8941

Due May 15 if on a calendar year

1. The employer must pay at least 50% of the premiums

2. Credit of up to 25% of the employer’s contribution for non-profits

3. Credit phased out as the number of FTEs increases from 10-25

4. Credit phased out as average compensation increases from $25k to $50k

Form 5578 Annual Certification of Racial Nondiscrimination for a Private School. This form applies to both schools and daycares. The defining criterion is that the daycare or preschool has a curriculum.

The form states that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that

This form is due May 15th for those whose fiscal year is the calendar year.

Private schools are required to advertise their racial nondiscrimination in the local newspaper.

New form

Replaces the 941c. Do not use the 941c anymore.

The 941-X is sent alone, not with a 941

Use a 941-X for each 941 you are correcting

Additional requirement to certify that you have filed or will file all applicable forms such as W-2.

The 941-X replaces form 843 when requesting a refund of over reported taxes. Continue to use 843 for refund of interest or penalties.